-1700127506.png)
China Concerns Hurting Oil Outlook
Crude oil is trading lower as we head through the back end of the week. Following a strong start on Monday, prices soon topped out and reversed lower as concerns over US and Chinese demand took hold, exacerbated by the EIA reporting a large inventories build. In China, data this week showed that new home prices fell for a fourth straight month, weighing on the demand outlook. Concerns around the health of the property sector have been front and centre since Country Garden, one of the largest Chinese property developers, defaulted on debt payments last month.
US Economy Cooling?
In the US, a further fall in inflation last month, coming hot on the back of weaker-than-forecast jobs data at the start of the month, has strengthened the view that the economy is starting to cool. With US crude production still at record levels, a softer demand environment is exerting plenty of bearish pressure on crude currently, despite a weaker USD.
Huge EIA Surplus
The EIA hit markets with a double barrel report on Wednesday. The delayed report from the prior week posted a huge 13.9-million-barrel surplus, while the current week posted a further 3.6-million-barrel surplus. The data serves as evidence of the slowdown in US demand and the impact of those soaring production levels. On the back of this data, crude looks likely to stay pressured into next week though a fresh turn lower in USD should offer some support.
Technical Views
Crude
The sell off in crude has seen the market breaking back below the 77.64 level for now. With momentum studies bearish, the focus is on further move lower while below the level, with 72.61 the next support to note. Bulls need to reclaim 82.59 to negate this view.
.png)
Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
Past performance is not indicative of future results.
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 75% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Futures and Options: Trading futures and options on margin carries a high degree of risk and may result in losses exceeding your initial investment. These products are not suitable for all investors. Ensure you fully understand the risks and take appropriate care to manage your risk.
With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.